However, it’s basically wasted space at this point and is about 1000 sf or maybe more.

@Mark FriesGood point Especially in low income areas .

The city did not allow any building without at least 1000 square feet of living space so he is putting that above the 4 car garage.

Additions, on old multifamilyWe're buying a property that is in an R3 zoned space and it's advertised as 5 units but it appears like some are converted garage or converted patio or something like that. 

I have the water turned on, but don't have window units are spaced heaters. 

Thanks, Mark!

My business partner has a hypothesis that spending extra money to build an abundance of storage space into a rental unit will keep tenants "sticky".

This lender would cash them out of their principle via cash out refinances, usually around the 5-6 year mark sometimes as soon as 3 years (depending on the market and principle pay down of the 1st note).

They are not living space.

The 3 year mark from the day you move out is important since it will be the deadline you have to decide whether you want to sell or keep this property without having to pay capital gains taxes. - Please notice that you won’t cash flow the $30k (minus repairs, vacancy, taxes, etc.) that you calculated, since you will have to pay interests for the HELOC